Does Shareholder Voting on Acquisitions Matter?

Abstract

I examine the effects of shareholder voting on acquisitions by comparing acquisitions that require acquirer shareholder approval to acquisitions that do not in a sample of 1,969 acquisitions announced between 1995 and 2003. I find that shareholder approval is less likely to be required in acquisitions that can be completed faster without it, and that these acquisitions take longer to complete when approval is required. By contrast, I do not find that acquisitions are less likely to require approval when opposition is likely, or that the approval requirement is related to announcement returns or premiums. Finally, I find that acquisitions requiring shareholder approval are less likely to be completed. This relation, however, is not affected by announcement returns, the presence of guaranteed shareholder support, or the type of majority required, suggesting that opposition is not the reason for the lower completion rate.